Draft Merger Agreement

---
name: ecvc-draft-merger-agreement
task_id: emerging-companies-venture-capital/draft-merger-agreement
description: Drafting a merger agreement requires structuring the merger form, allocating assignment and consent risk, addressing any required governmental or third-party approvals, drafting earnout protections if applicable, handling warrant notice obligations if applicable, and using a market-standard material adverse effect definition and remedies structure.
activates_for: [planner, solver, checker]
---

# Skill: Draft Merger Agreement

## 2. Failure modes the skill is correcting

- The merger form is drafted generically and does not track the consequences of a reverse triangular structure for contract assignment, change-of-control triggers, consent timing, and closing mechanics.
- The agreement omits or understates the need to obtain and evidence governmental approvals, third-party consents, or notices before closing.
- Closing conditions, interim covenants, and outside-date mechanics are not coordinated with the expected timing of consents, approvals, and notice periods.
- Earnout language, if used, defines outcomes but fails to protect the buyer against operational interference claims or to give the seller a workable verification path.
- Warrant treatment is left ambiguous, especially where notice, exercise, settlement, or cancellation mechanics are triggered by the merger.
- The MAE definition is overbroad or under-carved-out, creating avoidable signing-to-closing risk.
- Remedies provisions are inconsistent, leaving specific performance, injunctive relief, and any reverse termination fee in tension.
- The draft ignores cross-document inconsistencies between the term sheet, diligence materials, cap table, financing instruments, consents, and equity awards.
- The draft presents conclusions without flagging open items in bracketed comments for partner review.

## 3. Legal frameworks / domain conventions that apply

- Reverse triangular merger structure: draft the merger agreement to reflect the parent-subsidiary acquisition mechanics, survivorship of the target as the merger subsidiary’s surviving entity, and the resulting treatment of equity, liabilities, and closing deliverables under applicable corporate law.
- Contract transfer and change-of-control analysis: review material contracts, leases, permits, and regulated arrangements for assignment, novation, consent, notice, and change-of-control triggers; build disclosure, covenant, and bring-down mechanics around the identified triggers.
- Governmental approvals and regulated consents: where approvals are required, include cooperation covenants, filing obligations, and an outside date that matches realistic regulatory timing.
- Earnout drafting: if consideration is deferred or contingent, define milestones from the deal materials, require ordinary-course operation of the business, prohibit unreasonable interference, and provide information and audit rights tied to the calculation mechanics.
- Warrant treatment: identify each outstanding warrant category and align the merger treatment with its notice, exercise, cash-out, assumption, or cancellation mechanics, including any required holder notices before or at closing.
- MAE definition: use a market-standard definition with customary carve-outs for general market, industry, macroeconomic, weather, epidemic/public health, and action-with-consent matters, plus any agreed disproportionate-impact qualifier.
- Remedies architecture: coordinate specific performance, equitable relief, and any reverse termination fee so the enforcement scheme is internally consistent and exclusive where intended.
- General drafting authority: apply Delaware merger agreement and corporate law conventions where applicable, together with standard contract interpretation principles governing conditions, covenants, representations, and disclosure schedules.
- If the source materials identify controlling statutes, regulations, or cases, track them as stated; otherwise rely on the standard governing authority for merger agreements in the applicable jurisdiction.

## 4. Analytical scaffolds

- Start from the term sheet and identify the agreed economic deal, then map every open implementation point to the diligence summary, cap table, bridge note, consents, and warrant documentation.
- Enumerate each consent-sensitive contract, financing instrument, equity security, or regulated approval item before drafting the corresponding covenant or closing condition.
- For each identified approval or consent item, state the required action, the responsible party, the document interaction, and the downstream closing risk if not obtained.
- For warrants and other outstanding equity-linked rights, reconcile the merger treatment against the cap table and the governing instrument, then draft any required notice, election, or payoff mechanics.
- For any earnout, draft the operative milestones, measurement period, accounting standard, dispute process, and post-closing operating covenants in the same instrument so the mechanism is self-executing.
- For MAE and interim operating covenants, keep the language balanced: seller-protective carve-outs, buyer protection for fundamental changes, and a coherent bring-down standard at closing.
- For remedies, make the specific performance clause, injunction language, and any fee or termination payment consistent with the closing conditions and termination rights.
- Flag all unresolved discrepancies in bracketed comments inside the draft, using concise notes that identify the source conflict and the item needing confirmation.
- If only one item exists in a category, say so affirmatively in the draft logic before using a singular covenant or condition.

## 5. Vertical / structural / temporal relationships (only if applicable)

- Structure the agreement from signing to closing to post-closing mechanics in chronological order, with conditions precedent before covenants, and covenants before termination and remedies.
- Tie each closing condition to the document or schedule that supplies the underlying fact, then tie each post-closing obligation to the operative party responsible for performance.
- Where closing depends on multiple approvals or notices, coordinate their sequencing so that filing, waiting periods, consents, and waivers are all addressed in the drafting.
- If the transaction contemplates deferred value, align any post-closing payment or earnout obligation with the period during which the business must be operated and monitored.
- Keep representations and schedules synchronized with the cap table, bridge debt, and equity instruments so the agreement does not overpromise title, capitalization, or payoff treatment.
- Where the deal is sensitive to timing, ensure the outside date, termination rights, and any extension mechanics reflect the expected path to clearance and closing.

## 6. Output structure conventions

- Draft a complete merger agreement in standard transactional form, not an outline or commentary summary.
- Use conventional merger-agreement sections for parties, recitals, definitions, merger mechanics, treatment of securities, representations and warranties, covenants, conditions to closing, termination, indemnification or remedies if applicable, and miscellaneous provisions.
- Include disclosure schedules, exhibits, annexes, or other attachments needed to implement the merger and related equity or warrant treatment.
- Insert bracketed comments only where the source materials conflict, omit necessary implementation details, or require a partner decision; keep comments terse and tied to the underlying issue.
- Where the draft depends on a legal proposition, use the controlling authority or standard market convention as support in the drafting logic rather than stating conclusions bare.
- Keep the draft internally consistent across the merger mechanics, closing conditions, termination rights, and remedy provisions.
- Ensure the final file delivered is `merger-agreement.docx` and that it contains the operative agreement text and any needed schedules, not a summary of the agreement.